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Diploma of Financial Planning Assignment Workplace Simulation

Important assessment information

Aims of this assessment

This simulated workplace assessment activity is conducted to the standard expected in the workplace in order to demonstrate consistent performance of typical activities experienced in the financial services industry.

This assessment focusses on a real life scenario where a financial planning firm was taken to the Financial Ombudsman Service (FOS) as a result of a client complaint. This compliant arrived at the FOS after the adviser and client unsuccessfully attempted to navigate a solution via the internal complaints process offered by the financial planning firm. This assessment addresses the six steps of the financial planning process in the context of a client compliant. Using the case study from the FOS, it requires the six step process to be broken down in detail to identify where key communication and procedural obligations (if applicable) were (and were not) followed. Key areas of focus include the Financial Services Guide (FSG), Client Questionnaire, Risk Profile, Statement of Advice (SOA), Product Disclosure Statement (PDS), Authority to Proceed, and arrangements for review.

This particular assessment forms part of your overall assessment for the following units of competency:

FNSCUS505

FNSCUS506

FNSFPL501

FNSIAD501

FNSFPL505

Assessment Activity
Workplace Simulation
FOFA – Dispute Resolution

Background

Module 1 covered the legal obligations and the six-step process financial advisers must follow when providing financial advice to clients. Not adhering to these obligations will inevitably lead to client complaints. Depending on the circumstances, this may lead to a range of adverse outcomes for an adviser. This includes monetary penalties, the AFSL withdrawing an adviser’s letter of authority that allows them to continue to work as an authorised representative, or in very serious circumstances, criminal charges being applied.

As indicated in the course materials, the Financial Ombudsman Service (FOS) is an approved external dispute resolution scheme approved by ASIC. Go to www.fos.org.au for more information. While seeking to resolve a client dispute internally is preferable compared to allowing a dispute to reach FOS, sometimes internal dispute resolution processes break down. It is at this point that every obligation you have learnt about in your studies will be analysed by FOS in detail in regard to the advice process.

At the end of this work place simulation, we have included a real FOS Case Determination between an aggrieved client and a financial planning firm. FOS protects the identity of both the financial planning firm and the client. Because the determination is a legal document, the client is called the “Applicant”, and the financial planning firm which stands for Financial Services Provider is referred to as “FSP”. You will see it also refers to the actual financial adviser as “Ms A”, and the actual clients as “Mr H” and “Mrs H”. The FOS determination is 10 pages in length. While the client was not successful in this FOS claim against the financial adviser or the firm, it illustrates very salient insight into why financial planners must follow their obligations so carefully. You must read this document in full in order to answer the questions in this assessment.

For your general interest, the FOS case number is 200885. If you ever want to source this case directly from FOS for any reason, it can be found by going to www.fos.org.au and searching under “Decisions” in the top right search section of the FOS homepage. You can then type in the Case Number.

Required

First, you are to read carefully the FOS Determination (note: it is contained in Appendix 20 of the Module 1 course materials). Second, you are then required to answer the following questions in the context of the information you have learnt in Module 1.

Summarise the advice recommended by Ms A

Stipulate the date Ms A prepared the SOA, and the date the subsequent advice was actioned including the amount invested.

Summarise the client’s grievance

List precisely what parts of the 6 Step Process Ms A followed (…or did not follow) based on your analysis of the case.

Important: The required minimum word length for this answer is 300 words. Refer to the “Reasons for Decision” section on page 5 of the FOS Determination. Summarise FOS’s decision, and make reference to the following issues:

FSG

Fact Find (i.e. Client Questionnaire)

Risk Profile

Statement of Advice (SOA)

Product Disclosure Statement (PDS)

Authority to Proceed

Refer to “Step One” of the six-step financial planning process outlined in the course materials - specifically the sub-heading titled “capturing a client’s risk tolerance” and “what is the client’s real risk profile”. Explain what practical measures you think Ms A could have undertaken so that Mr and Mrs H understood the risks of Ms A’s recommended investment portfolio better?

Refer to “Step Six” of the six-step financial planning process outlined in the course materials. Explain why you think FOS made a finding that despite Ms A not reviewing Mr and Mrs H’s portfolio, Ms A was not at fault. Explain in the context of the purpose of reviewing, revising and maintaining a financial plan.

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